Sent reeling in the middle of last week, general retail stocks subsequently staged a recovery, but still underperformed the market and their food peers.
News of Bish-Jones’ exit coincided with a Woolworths trading update and many brokers were bearish about prospects. “Poorish sales, margin pressures and the departure of a chief executive do not a good announcement make,” said Panmure Gordon, as it cut its price target to 9p.
Dresdner Kleinwort downgraded Woolies from add to hold and warned the shares would be volatile. Shore Capital said the 2.2 per cent retail like-for-like decline was not as bad as feared and its “weak hold” recommendation was underpinned by the potential sale of Woolworths’ stake in 2entertain.
As Retail Week went to press, the market awaited anxiously an update from sofa specialist Land of Leather. The retailer said on Monday that it hoped to unveil an underwritten equity fundraising by the end of this week. Rival ScS was seeking working capital after supplier credit insurance was withdrawn last week.
Fashion store group Next agreed a£295 million five-year, revolving credit facility to replace the one that was due to expire in September next year. It said the new, unsecured, deal “contains the same covenant performance ratios in respect of gearing, fixed charge and interest cover”.
JP Morgan was disappointed by last week’s results from Carphone Warehouse. Although performance met expectations, chief executive Charles Dunstone’s bearish comment about the outlook worried the broker. Investec, however, said the post-update sell-off was overdone and reiterated its buy advice.
Pali International compared the outlook for electricals enemies DSGi and Kesa, rating them sell and buy respectively. Pali dislikes “structural and cyclical pressures” on DSGi, but thinks Kesa oversold ahead of results next week.
Variety store group Instore revealed preliminary talks with an unnamed suitor – thought to be leading shareholder Abdul Aziz Tayub’s Crown Crest – were under way, but there was no certainty of a deal.
AIM-listed wine retailer Majestic notched up a 3.4 per cent full-year profit rise to£16.7 million on sales ahead 3.1 per cent to£197 million. Buy, advised Landsbanki. Despite spending squeeze fears, the broker said: “We believe Majestic’s customers are a loyal bunch and demand for wine does have some inelastic qualities.”